Both GM and Ford stocks are headed to $1 per share or lower.

Nov.19, 2008 in Market Outlook

Ford almost made it there today. The market capitalization of GM is now $1.6 billion versus a market cap of $46 billion 10 years ago at the end of 1998. Ford’s market capitalization at the end of 1998 was $71 billion and today is now $2.99 billion. The combined market cap of both GM and Ford is now $4.6 billion. Thus, the US taxpayers could outright purchase all of the stock in both companies for less than $5 billion and own them lock stock and barrel as nationalized enterprises.

Perhaps this is what should be done as it would be far cheaper than loaning them a penny over the $4.6 billion it would take to completely buy out all of the existing shareholders. And every day this purchase price is getting even cheaper.

Alternatively, EXXON could buy both GM and Ford for only about 12% of its annual profits.

What is needed most with both Ford and GM is COMPLETE REPLACEMENT OF MANAGEMENT which is why these companies are both in such dire straits. Other automobile companies are doing fine and have desirable products - but the products that both GM and Ford are producing are among the worst they have ever produced and ill-suited for today’s marketplace. Both are touting and introducing new versions of ultra-high-performance oriented vehicles such as the Corvette and Mustang - when what is needed is nice new ultra-fuel-efficient vehicles that are attractive, well-designed, and well-built - and neither company has any offerings in that class.

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